Standard Variable Home Loan
This is the standard type loan product available with the majority of financial institutions. Many large lenders also use standard variable loans as their benchmark product and compare themselves to other financial institutions based on the price of the standard variable. The standard variable loan has an interest rate which moves up and down depending on the financial markets.
The standard variable type of loan comes with the many benefits allocated to flexible loans. This loan can come with an initial honey moon period with some lenders, and is called a standard variable after the first year’s honeymoon period. In addition, the standard variable generally has a flexible redraw facility. This allows you to redraw excess funds paid into the loan. Many lenders nowadays will also allow you to do the redraw for free, although some lenders restrict the minimum redraw amount to $1000.
Are standard variables the same between different lenders?
Although many lenders offer many different features within their loan products, they are not all exactly the same. For example, after the financial crisis of 2008 there was a pricing difference on standard variable products between different lenders. This was a relatively new phenomenon as in the previous 10 years there was no more than 0.05% difference between many financial institution’s standard variable rates. Hence, nowadays you will find a noticeable difference in the price of a standard variable between different lenders.
Some lenders will also offer a 100% offset feature with standard variable types of loans, and will also give a credit card as part of the loan offer, with the ability to request a cheque book for free.
Can I get a professional package with a Standard variable home loan?
Most professional package loans come packaged within a standard variable loan. Hence most lenders will offer the professional package discount off the standard variable loan. The discount applied to a professional package off the standard variable varies from one lender to another. As a basic rule, a lender will offer 0.5% -0.7% discount off a standard variable loan for loans over $250,000.
Is the standard variable a more expensive loan?
The traditional standard variable is more expensive than other loans which can be found within banks product suites. If a person has a standard variable from pre 2003, then it is likely that person is paying a higher rate than people who have taken a loan after 2003. This is because pre 2003, many people and lenders gave this product to their clients based on an offering on the day. Today these loans can be discounted and made cheaper giving the client the benefit of saving thousands over a period of time.
Can I switch from a standard variable loan to another loan?
Most lenders allow you to switch to a different type of loan on offer within their own product suite. In most cases, clients would usually switch to a fixed rate. Some lenders will not charge a fee for this, but others may.
You could also switch from a standard variable to a line of credit loan or a basic loan. However, it is worth noting that you could lose some of the benefits attached to the standard variable loan in doing this. For example, if you were to switch to a line of credit from a standard variable, you would lose your 100% offset feature as that usually comes attached only to standard variable loan.
Can I get a standard variable with a low doc loan?
Yes, the standard variable can be packaged up within a low doc loan. Furthermore, the standard variable home loan can also be packaged within a low doc professional package loan. This structure is very cost effective for any low doc customer giving the ability to have a loan without showing income documents, coupled with a discounted rate.
At Mortgage Providers, we pride ourselves on our ability to put together loan packages that suit our client’s needs. Hence we know how to package the standard variable within many different institutions giving the client a savings in the advertised interest rate, and also attaching features which benefit the client’s financial requirements. In the majority of cases, we can also have some fees waived.
